where

 "R" means the portion of the cost of compliance to be reimbursed to
 Lessee.

 "M" means the number of months (including parts thereof) between (1) the
 earlier of (a) the date of completion of such modification and (b) the
 originally required date thereof and (2) the end of the Lease Term. Where
 the original required date thereof is after the end of the Lease Term for
 such Aircraft, M shall equal 0.

 "C" means the cost of completing such modification at an Approved
 Maintenance Provider's normal commercial labour charge rates plus
 reasonable cost of materials, subtracting any subsidy, warranty payment or
 other benefit provided to Lessee and excluding any loss or expenses
 incurred because of inability to operate such Aircraft.

Should an Event of Default have occurred and be at any relevant time continuing,
Lessor shall retain such amount until such Event of Default or Default shall
have been cured whereupon it shall pay to Lessee any such amount less any
portion thereof as was applied by Lessor to cure such Default or Event of
Default.

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\* escalated at 3% commencing on January 1, 2005 and each annual anniversary date
thereafter.



 SCHEDULE 12

 FORM OF WARRANTY ASSIGNMENT

\_\_\_\_\_\_\_\_\_, 200\_

The Boeing Company
P.O. Box 3707
Seattle, Washington 98124-2207

Attention: Vice President - Contracts
 Mail Code 21-34

Ladies and Gentlemen: